This week startup Fenix International — which is based in San Francisco and Kampala, Uganda, and was founded in 2009 — announced that it has raised a Series B round of $12.6 million to get its battery and solar panel product into the hands of more customers. Fenix emerged from stealth in late 2010 with a plan to sell its lead acid battery product, which comes with a solar panel and other energy adapters, to customers in rural Africa.

One of the main hurdles to selling the battery product was that it cost between $150 to $199, which might not sound like a lot on Kickstarter, but for a customer in Uganda, it sure is. So more recently, in 2014, Fenix launched a mobile payment system in partnership with MTN that enables customers to pay for the battery and solar panels using cell phone payments over time.

Kevin Tofel uses a ReadySet to charge his iPad mini.

Fenix International’s CEO Mike Lin tells me that the company has now sold more than 25,000 solar systems to date, with more than 15,000 of those connected to their ReadyPay platform. Lin says they’ve recently started adding over 100 new households on ReadyPay solar each day.

Another startup called D.Light sells offgrid solar products (like solar lanterns) and as of last year the company had sold six million devices, affecting the lives of about 29 million people. D.Light works with M-KOPA to sell pay-as-you-go solar panel systems for homes.

Fenix International’s ReadyPay solar system.

While the market for offgrid solar panels and battery systems is still small, it has a lot of promise and could grow dramatically in the future. The key to many of these markets is using mobile payments, partnering with local providers like telcos, and figuring out distribution.

]]>Entrepreneur Jesse Moore holds a Coke bottle full of dirty-looking transparent liquid up in front of a crowded room of several hundred people at the Grand Hyatt Hotel, next to Grand Central Station in Manhattan. The stage he stands on is covered with purple carpet and framed with dramatic curtains. “This is what we’re competing against,” Moore, a former mobile phone executive, tells the group, which is mostly wearing dark-colored suits and is made up of a lot of influential, and some very wealthy, people, including investors, policy-makers, analysts and members of the media.

The occasion is Bloomberg’s three-day energy conference, and Moore is one of ten executives whose companies were receiving honors for being “new energy pioneers.” Moore’s young startup is called M-KOPA and it provides the financing and distribution for a pay-as-you-go, mobile phone–enabled home solar panel system for off-grid rural villagers in Kenya and Uganda.

A home in Kenya, lit up by a solar panel system, sold by M-KOPA. All photos courtesy of M-KOPA, Georgia Goodwin.

The bottle Moore holds up is full of kerosene, which is the most common way that rural Kenyans currently light their homes. But by paying about 40 shillings (46 cents) a day, his customers can switch over to using the power of the sun to light their homes and charge their mobile phones, and eliminate the downsides that go along with kerosene lanterns (they’re dirty and can be unsafe, and kerosene is relatively expensive).

The audience in Manhattan is won over. Moore receives the audience choice award and the moderator hands him a huge bottle of champagne wrapped in shiny silver paper. After the conference he’ll head back to Nairobi and continue the hard slog of helping get more solar panels into the hands of rural villagers, many of whom live on less than $2 a day.

An idea

Moore moved to Nairobi four years ago this month to jumpstart the business with co-founder Nick Hughes. Hughes was one of the original creators of mobile payment system M-PESA, developed by telecom giant Vodafone and its partially owned Nairobi-based phone company Safaricom. If you’re not familiar with M-PESA, it’s one of the world’s most successful mobile payment services — 95 percent of Kenyan adults use it and, by some estimates, a third of the Kenya’s GDP flows through it every year.

Moore briefly worked on M-PESA in England, and Hughes approached him with the then out-there proposition that they should leave their cushy jobs and use M-PESA as a backbone for financing assets for Kenyans. Hughes’ idea was that M-PESA is such a well-adopted, easy-to-use payment system that it could be used to offer credit to people who didn’t have bank accounts or full-time employment. The partners could have financed any kind of electronic assets, really, but electronics need one thing that’s lacking in rural Kenya: reliable power.

A child in Kenya holds a light powered by a solar panel sold by M-KOPA.

The solar panels, control system and other appliances like LED lights and radios that M-KOPA sells are provided by partner and fellow startup d.light. D.light’s home solar system is its most recent product — it’s mostly built a business off of making solar lanterns — but also one of its fastest growing offerings. The d.light home solar system uses a 4-watt solar panel and costs about $200. Customers pay for the system with a small up-front sum and then usually daily micro-payments over the course of a year.

Over time the solar systems are cheaper than kerosene, and from the beginning are just, frankly, better. Kerosene lanterns emit fumes that are harmful to breathe in. They also can be dangerous, and if lanterns are tipped over, the spilled hot fuel can cause burns and fires. If every home in rural Kenya switched over to solar panels, it would lead to millions of people living substantially better lives and saving money.

Moore told me in an interview, the day after his talk on stage in New York, that the early days of bootstrapping the company were “harrowing.” He and Hughes hadn’t yet raised any financing and they had to figure out the right model to offer customers credit that could reliably be paid back over a year.

Early on, they figured out that mobile phone technology provided the financial infrastructure. It’s not just that they use M-PESA, but their mobile solar system also provides customers mobile alerts and payment reminders, and they also partnered with the mobile carrier Safaricom to help with branding, marketing and distribution.

Studying by the light powered by a solar system sold by M-KOPA

Distribution is the key to the bulk of M-KOPA’s success. The reason the business has started to take off isn’t about technology, Moore says:

“Technology is just step one of ten. The other nine steps are about getting the product to market, having stock and availability and having customer care….It’s not sexy stuff that makes it happen, it’s rolling up your sleeves and hiring people.”

Today M-KOPA, after two and a half years in business, has 300 employees, and works with another 700 people — independent entrepreneurs and shop owners — who sell its solar products across Kenya. The solar panels can’t be sold off the back of a truck, says Moore — they need to be sold locally by someone who can explain them and show why they’re important and how they work. M-KOPA also has a 24-hour customer call center staffed by 100 employees.

To date M-KOPA has sold 65,000 solar systems over 18 months, at a rate of about a thousand per week or 5,000 per month. But that’s about to change. Moore says M-KOPA is trying to hit a rate of selling more on par with a thousand solar systems per day.

A shop owner lights up his shop with a solar system sold by M-KOPA

Growing up

M-KOPA hit a major milestone in February: it closed a $10 million loan from the Commercial Bank of Africa to fund growth of its solar systems, as well as another $10 million in a combination of equity and grants from the United Kingdom’s Department for International Development (DFID), the Bill & Melinda Gates Foundation and the Shell Foundation. M-KOPA’s lead and original equity investor is the Atlanta, GA–based GrayGhost Ventures.

Moore tells me he expects the number of employees to grow to 500 by the end of the year, and potentially close to 1,000 within two years. The number of independent retailers could grow to 2,000 over that time period.

One of the side effects of this growth will be the emergence of the data associated with having such a substantial customer footprint. M-KOPA already collects 200,000 mobile payments per month from customers who don’t have formal banking and credit history. Combine that with data from solar panel and battery readings and weather data from the solar capacity, and M-KOPA is “swimming in data,” says Moore. The next thing to figure out is just what to do with it.

Data is just a byproduct of the solar systems, though. Growth is the key thing on the co-founders’ minds now.

An M-KOPA retailer hands out flyers about the solar product.

And the major way to achieve that growth is the “unsexy” distribution system that enables M-KOPA to achieve a 95 percent repayment rate. The bank loan, from the Commercial Bank of Africa, is based on M-KOPA’s proven ability to collect the funds. “It’s one thing to get the customer to use the solar system; it’s another thing entirely to collect the micropayments over a year,” says Moore. But customers are “highly motivated” to pay back the loan because the solar panels are less expensive than kerosene over time.

Moore’s findings about the unsexy engine of the business echo d.light CEO Donn Tince’s thoughts closely: local distribution is the biggest challenge in areas that often lack roads, banking, shipping and legal systems. The difficulty of growing this type of distribution is the main thing that other startups, who are trying to sell similar off-grid solar products, struggle with. M-KOPA is one of the more successful, as is d.light.

Cell phone charging via a solar system sold by M-KOPA.

One day when M-KOPA is able to sign up millions and then tens of millions of Kenyans, it will start to show the world that off-grid solar for rural customers is, indeed, bankable and can be profitable. Right now most North American and European banks and traditional solar financiers deem the sector too small, too risky and too experimental. But eventually, that will change.

And as as result, millions of people who were relying on dirty and expensive kerosene lanterns to light their homes will have their lives changed substantially for the better, through the power of the sun.

Updated at 8:02 AM pst on April 10 to reflect that the solar panel is 4 watts, not 40 watts.

]]>There has been a lot of speculation over whether recent disclosures about America’s extensive spy programs will harm the country’s economic interests. Now, in one of the first concrete examples of economic fall-out, the Wall Street Journal reports that AT&T’s plans to make a bid for Vodafone have been set back indefinitely over growing European anger over the US telephone company’s role in collecting information.

Recent leaks by former NSA contractor Edward Snowden suggest that both AT&T and Verizon, which has also been mulling a bid for Vodafone, have participated in an ongoing US program to collect and record call data in the U.S and abroad. New disclosures that the U.S. tapped the personal cell phone of the German Chancellor have added new fuel to the controversy.

All that remains now is a German formality known as a “domination and profit and loss transfer agreement” – but Voda now owns 76.57 percent of Kabel’s share capital, for which it paid €5.7 billion ($7.7 billion). The deal is all but done.

The takeover of Germany’s largest cable operator will allow Vodafone to offer high-speed broadband without needing to pay rival Deutsche Telekom for using its infrastructure. It will also give Vodafone a stronger hand in the IPTV game.

]]>The British telecoms regulator Ofcom has published proposals for raising the UK’s 2G license fees, in order to reflect the true worth of the relevant spectrum.

The spectrum in question, in the 900MHz and 1800MHz bands, can these days be reused for 3G and 4G services, so its value has gone up a great deal since the days when it was only usable for voice and SMS. According to Ofcom, that increase in worth (which also takes into account spectrum value in other countries) should be reflected thus, in terms of annual fees:

Vodafone would pay £83.1 million ($132.5 million) rather than £15.6 million

O2 would pay £83.1 million rather than £15.6 million

EE would pay £107.1 million rather than £24.9 million

Three would pay £35.7 million rather than £8.3 million

Now, the government asked Ofcom to recalculate the fees almost 3 years ago, but it did ask the regulator to take into account the amount the carriers paid in this year’s 4G spectrum auction. It’s worth recalling the controversy surrounding that auction result, for context.

The British chancellor, George Osborne, had decided in advance of the auction that it would raise £3.5 billion, but it only raised £2.34 billion (on a reserve price of £1.3 billion). Where did the £3.5 billion prediction come from? Not from facts, certainly – I know, because I chased all the relevant government departments after the results came in, and all denied being behind the prediction. Indeed, there’s a pretty powerful argument that Osborne plucked the £3.5 billion figure from the air in order to help him manipulate perceptions of the UK deficit.

(And for those who wonder why the 4G auction raised around a tenth of what the 3G auction raised, that 3G auction involved disastrous overbidding by the British carriers, and it took almost a decade for the local telecoms industry to recover. Ofcom was always crystal clear that the 4G auction was about getting the most efficient result, not the most money for the Treasury.)

Anyhow, back to the 2G license fees. Ofcom is currently consulting on its proposals, and anyone who wants to comment has until 19 December to do so. The new fees will come in next year.

An interesting note from Ofcom’s side:

“We do not propose to phase in fees. Licensees have known since December 2010 that fees would be revised to reflect full market value. We believe that revised fees can be implemented in a single step without having an adverse impact on services delivered to customers.”

So far the carriers’ reactions have proven mixed. An O2 spokesperson told me: “The consultation document was expected and the approach appears to be in line with Ofcom’s earlier guidance. We’ll now be looking through it in detail and will respond to Ofcom in due course.”

EE, on the other hand, said the proposed increase was “excessive at a time when we are investing heavily in the roll out of 4G.” Which is rather what you’d expect the firm with the most 2G spectrum to say, although it is a bit rich considering EE was the first UK operator to refarm its 2G spectrum for 4G services, giving it a headstart over those with less 2G spectrum.

]]>A set of redefining technological trends is reshaping the landscape from a slow and cumbersome process practiced mainly by large enterprises to a much more flexible, agile process that mid-market companies as well as individuals can utilize.

The Commission’s antitrust division said on Friday that the two companies’ activities were mostly complementary – while Vodafone is a broadband player in Germany, its main focus is on mobile, and Kabel may be a small-time mobile virtual network operator (MVNO) but its focus is on providing cable broadband and IPTV services.

Once Vodafone has bought Kabel, the combined operation will be able to offer more attractive home-phone/mobile/broadband/IPTV bundles. The Commission said this would actually benefit competition in the market, presumably because it would allow Vodafone to take on the German multi-play leader, Deutsche Telekom, more effectively.

A Vodafone spokesman told me the only remaining stage before the transaction can go ahead will be the Kabel AGM, which will take place on 10 October. That’s a formality though, as enough shareholders have already given their approval to the deal.

The $10.3 billion transaction should therefore close on 14 October, shaking up the German market and probably presaging a wider Vodafone campaign to buy up broadband and cable players in the European markets where its mobile operations are strongest. With $130 billion soon to be in the bank from the sale of its Verizon Wireless stake to Verizon, Vodafone should be able to aim high in this drive.

There had been worries earlier this week that Vodafone would fail to reach that threshold by the deadline at the end of Wednesday: on Wednesday itself, only 20 percent of the shares were secured. The companies said on Thursday that the threshold had been reached, and that Vodafone would reveal the final acceptance ratio on Monday.

Vodafone is Germany’s number-two cellular carrier and, compared with fiber-equipped mobile market leader Deutsche Telekom, it has a relatively small fixed-line business (and a DSL-based one at that) to match its mobile operations. That will probably soon change, assuming the deal gets clearance from European antitrust regulator Joaquin Almunia. And if Vodafone has more fixed-line customers in Germany, it will be easier to sell them fixed-mobile-IPTV service bundles.

That said, the Wall Street Journalreported on Friday that holdout funds such as Elliott Capital Advisors, which recently picked up 10 percent of Kabel’s shares, could still try to block the offer. This could theoretically lead to a long-running battle.

Although it laid out its intentions to buy Kabel back in June, Vodafone is about to pull in a huge wad of cash from the sale of its Verizon Wireless stake to Verizon. Of that $130 billion haul, it will devote just north of $35 billion to growth in the European fixed-line space, and everyone’s waiting to see what the next acquisition target is.

]]>Confirming recent rumors, Guy Laurence, the chief executive of Vodafone’s UK network, is to take the top job at Canada’s Rogers Communication.

Laurence will take the CEO job at Rogers in early December, when current chief executive Nadir Mohamed steps down as he announced earlier this year. Vodafone said on Thursday that he will be replaced by Vodafone UK’s current enterprise director, Jeroen Hoencamp, who will report to regional CEO Philipp Humm.

According to Rogers chairman Alan Horn:

“The board unanimously chose Guy as the best leader to succeed Nadir and to take the company forward. Guy is a strong, proven executive who has consistently delivered strong financial and operating results in highly complex and competitive markets. The breadth and depth of his experience in telecommunications, pay television and media are perfectly suited to Rogers and to the challenges and opportunities we see ahead.”

Laurence has been at Vodafone since 2000 – he was CEO of Vodafone Netherlands between 2005-2008, after which he became CEO at Vodafone UK. Prior to being with the British telecoms giant, he was in the media business, working at companies such as MGM Studios.